It is harvesting time in Colorado and before you buy hemp or hemp seeds, you may need to obtain a license from the Colorado Department of Agriculture (CDA) first. The CDA requires all purchasers of commodities and farm products in the state to obtain licenses. These licensing requirements extend to industrial hemp and industrial hemp seeds. See §§ 35-36-101 et seq and 35-37-101 et seq, CRS.
Do you need a commodity handler license for hemp?
Anyone buying unprocessed seeds, including hemp seeds, from a source in Colorado besides the end user needs a commodity handler license. Anyone brokering transactions of hemp seeds between the buyer and the seller needs a commodity handlers’ license.
Do you need a farm products handler license for hemp?
Anyone buying unprocessed industrial hemp from a source in Colorado besides the end user needs a farm products handler license. A hemp processor is not considered an end user, so processors buying hemp in Colorado are required to obtain this type of license.
Sellers of raw hemp or hemp seeds don’t need a license, except that if they bought the products in Colorado they would need a farm products handler license, as a buyer. If they bought the products elsewhere and brought them to Colorado, no licensing requirement applies.
Do brokers need a license?
Anyone engaged in soliciting or negotiating the sales of commodities or farm products between a vendor and purchaser will need to obtain a commodities handler or farm products handler license as applicable.
Do processors need a license?
Processors who purchase hemp seeds or hemp which has not been modified, for further processing, will need to obtain a commodity handler or farm products handler license as applicable. Processors may also need a Colorado wholesale hemp food manufacturer license from Colorado Department of Public Health and Environment.
What about buying finished or processed product?
Buyers and sellers of processed hemp, which includes CBD distillate, isolate, crude oil, milled hemp or finished products, or any product which has been dried, canned, fermented, distilled, extracted, preserved, ground, crushed, flaked, mixed, or otherwise changed in form do not need any commodity handler or farm products handler license in this program. Hanging hemp to dry prior to sale does not constitute processing for this purpose.
Bond requirement and penalties for non-compliance
Farm products handler and commodity handler licensees are required to post a bond or letter of credit with the CDA. Cash buyers, and low volume buyers making annual transactions under $20,000 per year with no one transaction over $2500, need a less expensive license and don’t need to post a bond.
Failure to obtain a license, failure to obtain a bond if required, or failure to pay for products under these statutes is an unlawful act punishable as a class 6 felony. The CDA program has an administrative process to field complaints and negotiate settlements.
What protections do the licenses offer?
Commodity licenses and farm products handler licenses are programs managed by the CDA to protect farmers who sell their products on credit terms. The CDA does not enforce quality of products or offer a venue under these licenses for contract disputes other than non-payment. If you are transacting for large quantities of hemp or hemp seeds, you should consult with an attorney about how to protect yourself.
If you have questions about compliance for purchasing hemp in Colorado, commodity handler or farm products handler licensing, contact McAllister Garfield, P.C. today.